Accountants at the Tucson firm, Larry Youdelman,CPAs, believed that several traveling executives were submittingunusually high travel vouchers when they returned from businesstrips. First, they took a sample of 200 vouchers submitted from the past year. Then they developed the following multiple-regres-sion equation relating expected travel cost to number of days on the road ( x1 ) and distance traveled ( x2 ) in miles:yn = +90.00 + +48.50x1 + +.40x2The coefficient of correlation computed was .68.a) If Donna Battista returns from a 300-mile trip that took herout of town for 5 days, what is the expected amount she shouldclaim as expenses?b) Battista submitted a reimbursement request for $685. Whatshould the accountant do?c) Should any other variables be included? Which ones? Why?
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Accountants at the Tucson firm, Larry Youdelman,
CPAs, believed that several traveling executives were submitting
unusually high travel vouchers when they returned from business
trips. First, they took a sample of 200 vouchers submitted from
the past year. Then they developed the following multiple-regres-
sion equation relating expected travel cost to number of days on
the road ( x1 ) and distance traveled ( x2 ) in miles:
yn = +90.00 + +48.50x1 + +.40x2
The coefficient of
a) If Donna Battista returns from a 300-mile trip that took her
out of town for 5 days, what is the expected amount she should
claim as expenses?
b) Battista submitted a reimbursement request for $685. What
should the accountant do?
c) Should any other variables be included? Which ones? Why?
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